A federal court has struck down the Securities and Exchange Commission’s (SEC) controversial dealer rule, delivering a major setback to the agency’s regulatory efforts in the crypto sector.
The US District Court for the Northern District of Texas ruled on Nov. 21 that the SEC exceeded its statutory authority, invalidating the rule as a violation of the Exchange Act.
The decision came after the Blockchain Association and the Crypto Freedom Alliance of Texas (CFAT) challenged the rule in court, arguing it unlawfully expanded the SEC’s jurisdiction and created uncertainty for digital asset innovators. The court agreed, describing the SEC’s definition of “dealer” as “untethered from the text, history, and structure” of the law.
Blockchain Association CEO Kristen Smith said:
“This ruling is a victory for the entire digital asset industry. The dealer rule was an attempt to unlawfully expand the SEC’s authority and stifle crypto innovation. Today’s decision curtails that overreach and safeguards the future of our industry.”
The SEC’s dealer rule, introduced earlier this year, sought to broaden the regulatory scope for market participants dealing in securities. Critics argued the rule would impose onerous compliance burdens on blockchain developers and small businesses, stifling innovation in the rapidly growing sector.
CFAT, a Texas-based trade group, joined the legal battle, calling the SEC’s actions a clear case of regulatory overreach.
Marisa Coppel, head of legal at the Blockchain Association, said:
“Litigation is never our first choice, but it is sometimes necessary to defend the industry from overzealous regulation. The court’s decision underscores the importance of adhering to the boundaries of statutory authority.”
The lawsuit, filed in April, marked a significant pushback against what many in the digital asset community see as the SEC’s aggressive regulatory agenda. Industry leaders have repeatedly criticized the agency’s approach, accusing it of using enforcement actions and ambiguous rules to curtail innovation.
The court’s ruling is expected to have far-reaching implications for digital asset regulation, signaling that judicial scrutiny of the SEC’s policies may intensify. Advocates hope the decision will prompt lawmakers and regulators to pursue clearer and more balanced policies for the sector.
The Blockchain Association represents a coalition of crypto companies, investors, and projects advocating for innovation-friendly regulations. CFAT promotes digital asset policy in Texas, emphasizing the economic and technological benefits of blockchain development.
Credit: Source link